Vasu Tech Ltd. vs H.S.I.I.D.C. and Others

Amit Rawal, J.

CA No. 425 of 2014

Application is allowed as prayed for subject to all just exceptions.

This application has been filed by the Provisional Liquidator under Section 457(3) of the Companies Act, 1956 read with Rule 272 of the Companies Act, 1956 for confirmation of sale of movable assets of Vasu Tech Limited (in provisional liquidation).

The controversy between the parties to the lis has already been reflected in the order dated 22.4.2009 whereby this Court after considering the detailed arguments and case law, admitted the petition and the admission was ordered to be published in the newspaper.

Thereafter vide order dated 14.10.2011 this Court, considering the fact that the respondent-Company was dealing the matter by filing an appeal against the order of admission and as well as was in the process of squandering/alienating the property, appointed the provisional liquidator attached to this Court to take over the immovable and movable assets of the respondent-Company. However, considering the prayer of the respondent-Company this Court kept the order of appointment of provisional liquidator in abeyance till the next date of hearing i.e. 23.11.2011. However, on 23.11.2011 it was brought to the notice of the Court that the respondent-Company had not paid any payment to the petitioner accordingly Official Liquidator attached to this Court was directed to proceed in terms of the order dated 14.10.2011 in accordance with law. It is a matter of record that the Company Appeal bearing No. 14 of 2009 vide order dated 10.11.2009 filed against the order dated 22.4.2009 whereby the aforementioned Company Petition was admitted was dismissed by the Division Bench.

Affidavit of compliance had been filed which was noticed in the order dated 8.4.2010. Since the ex-Management of the Company (in provisional liquidation) was not co-operating with the Official Liquidator, and after noticing the request of the O.L. vide order dated 2.8.2012, this Court directed the provisional liquidator to initiate the proceedings under Section 454 of the Companies Act, 1956.

The sale notice was published in the newspaper Tribune on 9.5.2014 for inviting sealed offers for purchase of land, building, plant and machineries of the Company (in provisional liquidation) on "as is various basis and whatever there is basis". The last date for submission of the bid was kept as 2.6.2014 and the tenders were to be opened on 3.6.2014. It transpired that 13 bidders had given bid in respect of lot No. II i.e. regarding plant and machinery of the Company (in provisional liquidation). On the same day i.e. 9.5.2014 another publication was carried out in "The Hindustan Times (Delhi and Chandigarh Edition) The Tribune (all editions) and Punjab Kesari "Chandigarh and Haryana edition) whereby the claims of creditors and workmen of the Company (in prov. Liqn.) were invited.

On 1.12.2014 it was brought to the notice of this Court that movable property i.e. plant and machinery of lot No. II of the Company (in provisional liquidation) was auctioned by the Official Liquidator and highest bid received was to the tune of Rs. 45.50 lacs. This Court after noticing the contention of the ex-Management of the Company (in provisional liquidation) to the effect that the valuation of the assets of the Company was on the lower side, ordered that the ex-Management shall be at liberty to find a better buyer offering a price more than what has already been offered for lot No. I and II. It was further ordered that the persons who participated in the auction in the bid of Lot No. I and II shall be at liberty to offer more bid than what has been offered by the previous bidder i.e. Golden Tex. The Official Liquidator was directed to give intimation to all the bidders to participate in the bid of lots No. I and II. The bidders were directed to bring the Demand Draft in favour of the Official Liquidator to the extent of 10% of the amount to be offered by them for the purpose of purchase of any assets of the Company (movable/immovable).

On 16.2.2015, the counsel for the ex-Management of the Company (in provisional liquidation) and bidders i.e. for both the lots I and II, were present in the Court and after inter-se bidding, this Court accepted the highest bid of Naresh Kumar which was to the tune of Rs. 6.25 Crores for Lot Nos. I and II and a draft of Rs. 50 lacs was handed over by the counsel for Naresh Kumar to the Official Liquidator in the Court and highest bidder was directed to deposit balance of 12,50,000/- to make it 10% as earnest money of offer made with the Official Liquidator within a period of 10 days. It was also ordered that earnest money of all other bidders be also returned by the Official Liquidator. The order dated 16.2.2015 is as under:-

"In terms of the order passed by this Court on 27.01.2015, the persons, namely, Naresh Kumar, Rahul Kumar Dhiman, M/s. S.Q. Traders, Shan Khan, M/s. Tripati Trading Company, M/s. Gera Wood Craft, M/s. Asian Beverages, M/s. S.K. Trading Co., M.D. Anwar, M.D. Shaney Arkan Alam, Gulshan Arora, Rajesh Kumar Garg, who had earlier offered to buy the Lot No. 11 are present in Court.

Earlier for lot No. 11 highest bid offered was of Rs. 45,50,000/- by Arkan Alam. At the time of inter-se bidding of lot No. 11 in Court starting from Rs. 52,00,000/- offered by Golden Tex and Rs. 52,50,000/- offered by Arkan Alam, final bid of Rs. 53, 00,000/- was given by Golden Tex. Golden Tex has already deposited a sum of Rs. 12,50,000/- with the Official Liquidator as earnest money for purchase of lot No. II. The composite bid of both the lots (lot No. I and II) was also made in the Court by Naresh Kumar and Golden Tex in the following manner:-

A draft of Rs. 50,00,000/- has been handed over by learned counsel appearing for Naresh Kumar to the Official liquidator in Court and the balance of Rs. 12,50,000/- to make it 10% as earnest money of the offer made shall be deposited by Naresh Kumar with the Official liquidator within a period of 10 days.

Learned counsel for the ex-management of the company in liquidation stated that the Ex-Managing Director of the company in liquidation Dhruv Verma, is in custody in the complaint filed under Section 138 of the Negotiable Instruments Act, 1881, wherein he has been convicted. She seeks four weeks time to bring a buyer, offering more than the price offered by Golden Tex for lot No. II or Naresh Kumar for lot Nos. I and II, together.

The offer for purchase of lot No. II in CA No. 886 of 2014 has been given by Golden Tex for a total sum of Rs. 52,00,000/- against which a sum of Rs. 12,50,000/- has been deposited as earnest money. At the time of auction the maximum offer was made by Arkan Alam for Rs. 45,50,000/- and he had deposited a sum of Rs. 11,50,000/- as earnest money at that time. As there is a buyer available offering more value for lot No. 11 and he has even deposited the earnest money of Rs. 12,50,000/-, Rs. 11,50,000/- deposited by Arkan Alam be returned to him by the Official liquidator. Since there is a buyer available offering money to the tune of Rs. 26.25 crores for lot Nos. I and II, together, the earnest money of Rs. 12,50,000/- deposited by Golden Tex, the highest bidder of lot No. II be also returned to them.

Adjourned to 17.03.2015."

On 17.3.2015, it was pointed out that the highest bidder has not deposited the balance amount of Rs. 12.50 lacs to make it 10% as earnest money of offer made and on request of the highest bidder, a week''s time was granted to deposit the balance amount. The said balance amount had accordingly been deposited, thus the Official Liquidator has received a sum of Rs. 62.50,000/- being 10% of the highest bid. Since the Company has failed to discharge the admitted liability and during the integrum subsequent events have taken place i.e. both movable and immovable assets of the Company have been sold. It is ex facie proved that the Company is unable to pay the admitted liability/debt.

Ms. Rupa Pathania, learned counsel appearing on behalf of the ex-Management of the company (in provn. liquidation) made submissions that the sale cannot be confirmed for the following reasons:-

i) No bid has been received by the Official Liquidator qua movable assets of the Company and only bids were in respect of movable assets.

ii) The sale cannot be confirmed as the highest bidder did not deposit 10% of the amount within 10 days as per the order dated 16.2.2015.

iii) The ex-Management of the Company (in provisional liquidation) is contemplating to file appeal against the order dated 16.2.2015 and as well as 17.3.2005 whereby one week''s time was granted to the highest bidder to deposit balance amount of Rs. 12,50,000/- with the Official Liquidator.

iv) She further submitted that the valuation of the property was not done as per the market value as the property could have fetched more amount than at what it has already been sold.

I have heard learned counsel for the ex-Management as well as learned counsel for the auction purchaser-Vishal Aggarwal.

It is a matter of record that pursuance to the sale notice published in the newspapers only 14 bidders have given the bid qua movable assets of the Company, thereafter as noticed above the matter was taken up by this Court and this Court vide order dated 1.12.2014 directed the Official Liquidator to intimate the bidders to bid for both movable and immovable assets and all the bidders were directed to bring 10% of the amount to be offered for purchasing any of the movable and immovable assets of the Company (in prov. liquidation). This Court had undertaken the task of bidding as is reflected in the order dated 16.2.2015 (supra) and the said bid has been conducted in the presence of the counsel for the ex-Management of the Company (in prov. Liquidation) in case there was any grievance qua the valuation of the property then nothing prevented them to bring a bidder, who could have given the higher bid than what it has been sold for. It appears that the ex-Management is adopting dilatory tactics in settling the claims of the Creditors, Workmen, much less, the culmination of the winding up procedure to its logical end.

As on today no appeal has been filed nor there is any interim order qua the acceptance of the highest bid. Even during the course of hearing the ex-Management of the Company (in provn. liquidation) failed to bring any bidder. Had such exercise been done this Court would have undertaken the task of bidding amongst the highest bidders. This Court vide order of the even date, while noticing that the Company is unable to discharge its admitted liability/debt, has been ordered the same to be wound up, it would be futile exercise to keep the matter pending regarding confirmation of sale in abeyance.

The ex-Management/Company (in liquidation) cannot be permitted to stall the process of confirmation of the sale and consequential act as enshrined under Section 529-A of the Companies Act, 1956 as the Company owes a huge amount to the Creditors both Secured and Unsecured as well as workmen. The bidders and the workers cannot be left high and dry. Secured Creditors cannot be prevented from recovery of their dues as the financial institutions are thriving their businesses on lending and in case the ex-Management is permitted to prolong the confirmation of the sale, not only the economy of financial institution would be hit, but, also of the Country.

No bidder has approached this Court for giving highest bid over and above the price what it has already been sold. I do not deem it appropriate to keep the application pending as a result of my observations made above, sale of movable and immovable assets i.e. Lot Nos. I and II of the Company (in liquidation) in favour of auction purchaser - Naresh Kumar is hereby confirmed. The auction purchaser is given six week''s time to deposit the balance sale consideration with the Official Liquidator in order to enable him to seek the possession of both movable and immovable assets of the Company.

On receipt of the balance sale consideration within the aforementioned period, the Official Liquidator is directed to hand over the possession of both movable and immovable assets of the Company in liquidation "as is where is basis and whatever there is basis" to the auction purchaser in accordance with law.

The application stands disposed of.